Calgon Carbon (CCC) Q4 Earnings, Revenues Miss Estimates

Calgon Carbon (NYSE:CCC) reported a net loss of $5.9 million or 12 cents per share in fourth-quarter 2016, compared with a profit of $7.7 million or 15 cents per share recorded a year ago. Barring one-time items, adjusted earnings were 5 cents per share that missed the Zacks Consensus Estimate of 16 cents.

Calgon Carbon raked in revenues of $137.5 million in the reported quarter, up around 5% year over year. However, sales missed the Zacks Consensus Estimate of $142 million. Currency swings had a $1.4 million unfavorable impact on sales in the reported quarter.

Gross margin (excluding depreciation and amortization), in the reported quarter was 31%, compared with 33.6% in the year-ago quarter. The decline was due to $1.5 million of costs associated with the activities of the New Business and $1 million of expenses related to planned maintenance outages at certain production facilities.

Calgon Carbon Corporation Price, Consensus and EPS Surprise

Segment Performance

Revenues from the company’s core Activated Carbon and Service segment decreased 3.5% year over year to $114.7 million in the reported quarter, hurt by low industrial process sales in Americas and Europe and reduced environmental water market sales in the Americas.

The Equipment division’s revenues declined around 5.4% year over year to $8.8 million as higher sales of carbon absorption equipment were more than offset by reduced ballast water treatment system and traditional ultraviolet light equipment system sales.

Sales from the Consumer segment slipped 29.6% year over year to $1.9 million in the quarter due to negative impact of currency translation on revenues and lower sales of carbon cloth for medical applications.

Financial Position

Calgon Carbon ended the quarter with cash and cash equivalents of $38 million, down around 29% year over year. Long-term debt was $220 million, up roughly 111.5% year over year.

Outlook

Calgon Carbon is focused on reducing costs, improving efficiency and capturing new businesses amid a still challenging operating environment. The company is aiming to generate EBITDA of more than $100 million this year despite of around $5 million of costs that it expects to incur during the first three quarters of 2017.

The New Business is expected to contribute approximately $100 million to sales. This acquisition complements Calgon Carbon’s ability to provide high-performing products to a demanding customer base and also expands the company’s product line.

The company is optimistic about potential growth in revenues in its legacy businesses in 2017, partly from potable water market projects in the U.S. and Europe. There are also opportunities for continued growth from an active North American drinking water market. Moreover, Calgon Carbon is well positioned to fully leverage a rebound in industrial activity that will help in sustaining its position as a leader in the North American drinking water market.

Price Performance

Calgon Carbon has underperformed the Zacks categorized Pollution Control industry over the past six months. The company’s shares have gained around 0.7% over this period, compared with roughly 7.8% increase recorded by the industry.

Zacks Rank & Key Picks

Calgon Carbon currently has a Zacks Rank #3 (Hold).

Better-ranked companies in the industrial products space include Casella Waste Systems, Inc. (NASDAQ:CWST) , Milacron Holdings Corp. (NYSE:MCRN) and Vertex Energy, Inc. (NASDAQ:VTNR) .

Casella Waste Systems has an expected earnings growth rate of 260.1% for the current year and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Milacron Holdings has an expected long-term growth of 12% and carries a Zacks Rank #1.

Vertex Energy has an expected long-term growth of 20% and carries a Zacks Rank #2 (Buy).

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